The Bipartisan Infrastructure Law's Hydroelectric Incentives Funding

Within the next two months, the US Department of Energy is expected to prepare guidance for two funding programs for hydroelectric power

Hydropower accounts for 31.5% of the overall renewable electricity generation in the United States and approximately 6.3% of total U.S. electricity generation, according to the US Department of Energy.

US hydroelectric plants deserve some recognition: By the US Energy Information Administration’s estimates, the average US hydroelectric facility has been operating for more than 60 years. To address these aging facilities and prevent the risk of losing well-paying clean energy jobs, the Bipartisan Infrastructure Law (BIL) provides funding to keep these facilities online.

Section 40333 of the BIL amends the Energy Policy Act of 2005 to establish a hydropower incentive program for old facilities—specifically, ones built before June 10, 1920. This new program under Section 247, Maintaining & Enhancing Hydroelectricity Incentives, provides $553.6 million in incentive payments to support and enhance existing hydropower facilities through capital improvements directly related to three main areas:

  1. Improving grid resiliency
  2. Improving dam safety
  3. Environmental improvements

For hydropower facilities that are less than 100 years old, the BIL also provides $75 million in incentive payments for owners or operators of existing hydroelectric facilities that make capital investments to improve their efficiency by at least 3%. Section 40332 of the BIL authorized funding for Section 243 of the Energy Policy Act of 2005: Hydroelectric Efficiency Improvement Incentives Program. Payments cannot exceed 30% of the costs of the applicable capital improvement. A single qualified hydroelectric facility may only receive one incentive payment of no more than $5 million from this program within a single fiscal year.

Additionally, the BIL provides $125 million to fund Section 242 of the Energy Policy Act of 2005, the Hydroelectric Production Incentive Program. This program provides incentive payments to qualified hydroelectric facilities for electricity generated and sold. The U.S. Department of Energy announced in September the distribution of $13.5 million in incentive payments to 55 hydroelectric facilities through the program.

Utilities with hydropower plants should consider the following for both Section 243 and 247 applications:

  • Dam safety: Projects that will be considered include maintenance and upgrade of spillways, dam stability improvements, including erosion repair and enhanced seepage controls, and upgrades or replacements of floodgates or natural infrastructure restoration.
  • Environmental impact: Applications that cite a broad environmental impact, such as benefits for multiple fish and wildlife species, will likely have an edge in the competitive process.
  • Economic impact: The Department of Energy will favor applications that promote job creation (short-term and long-term employment), particularly the expansion of union jobs and workforce development. As such, quantifying the expected economic impact should be core to the application’s business case. Applicants may consider how workers at displaced fossil-fueled facilities or declining resource-based industries could be employed for hydroelectric power initiatives.
  • Resiliency: This should be a major aspect of applications, as the 247 program will be overseen by the DOE’s Grid Deployment Office. They are seeking projects that can adapt quickly to changing grid conditions, integrate renewable resources, and can manage accumulated reservoir sediments.

 

Sources:

First sentence, slide 37 of DOE slide deck

31.5% hydro and 6.3% total renewable figures: 242 program https://www.energy.gov/eere/articles/us-department-energy-distributes-135-million-support-record-number-hydroelectric

Dam safety and resiliency projects info: https://www.energy.gov/sites/default/files/2022-08/RFIListeningSession_FINAL_CLEAN.pdf

Program 247: https://www.energy.gov/gdo/section-247-maintaining-and-enhancing-hydroelectricity-incentives

Program 243: https://www.energy.gov/gdo/section-243-hydroelectric-efficiency-improvement-incentives-program

Program 242: https://www.energy.gov/gdo/section-242-hydroelectric-production-incentive-program

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